R&D Investment, Innovation, and Productivity in NGX Firms

This study examines the relationship between research and development (R&D) investment, innovation, and firm productivity among listed companies on the Nigerian Exchange Group (NGX), utilizing panel data spanning 2011-2025. Using a balanced panel of 148 firms and employing fixed-effects panel regression analysis, we investigate how R&D expenditure influences productivity outcomes while controlling for firm size, return on assets (ROA), leverage, Big 4 auditor status, board independence, industry classification, and temporal factors. Our findings reveal that R&D investment has a statistically significant positive relationship with firm productivity, with elasticity estimates suggesting that a 1% increase in R&D expenditure is associated with approximately 0.34% increase in productivity metrics. The study further demonstrates that the effectiveness of R&D investment is contingent upon firm organizational governance structures, particularly board independence, which moderates the R&D-productivity nexus. Industry heterogeneity emerges as a critical factor, with manufacturing and technology-intensive sectors demonstrating stronger R&D-productivity relationships compared to service and financial sectors. These findings have substantial implications for corporate strategy, policy formulation, and resource allocation decisions within emerging market economies. The study contributes to the limited body of empirical evidence on R&D investment efficacy in Sub-Saharan Africa and provides actionable insights for managers, investors, and policymakers seeking to foster innovation-driven growth in Nigeria.